Research and Case Analysis

Microeconomics

Microeconomics is the subset of economic thought that deals with how individual consumers and suppliers interact to come up with an economic way of producing the needed goods for the market to work . Individual consumers will have to allocate their funds to purchase the goods they need . Individual firms will have to make decisions on how much product to produce and the price that they will sell it . Microeconomics takes from the science of economics the concepts of tradeoffs . In the real world , all inputs to the market are limited thus

necessitating all market players whether they be suppliers or consumers , to do sacrifices and tradeoffs in choosing to prioritize one product over the other

As the holiday season is approaching , I chose to analyze the market for Christmas decorations . These include anything that is used to decorate houses and other buildings in the spirit of the Christmas season . These may include icicle lights , plastic Christmas ornaments , Christmas trees and other holiday accouterments

Economics tells us that the mechanisms of supply and demand are going to be the determinants for the market price of any product . As far as I know , Christmas decorations are not under some pricing regulation such as a price ceiling or floor . This leads me to conclude that the Christmas decoration market is an approximate of an ideal free market case because of its lack of regulation

From supply and demand , we know that the higher the demand for a product , the higher its price would be and thus the higher the manufacturer 's profits . For Christmas decorations , that demand would be nearly zero for the most part of the year with a need for Christmas decorations appearing only during November and December . Thus for a manufacturer of Christmas decorations , he will have nearly zero revenue and profit during the first ten months of the year

It is therefore wise for manufacturers to produce other products during the non-holiday months . Plastic ornament manufacturers may manufacture other commodity plastic products such as beach balls or packaging . In this way , the manufacturers are able to continually produce viable profitable products all year round . On the other hand , this is a luxury not available for pine tree farmers . Pine tree farms for Christmas trees cannot produce any other products during the summer months except for possible rent as a camping site . It is also logistically impossible to grow another crop during the summer season and plant pine trees for Christmas consumption come autumn due to the length of time that pine trees need to grow . As such , the pine tree grower must recuperate his year round costs on the batch of trees that he will sell during the holidays

Another concern for the pine tree grower is the fact that a house only has one Christmas tree . There is a ceiling to how many trees a pine tree grower may sell as there are only a finite number of houses that his distribution channels may reach . He cannot...